[Paleopsych] failure of the system
Lynn D. Johnson, Ph.D.
ljohnson at solution-consulting.com
Tue Jan 25 02:35:15 UTC 2005
Actually, I view this a bit differently. Chris Rauh's question about
people who 'got easy money on a free market' may be an artifact of too
much socialism in his education <grin, wink at Chris>. In economics,
people who get money through the free market are offering a socially
useful service. Generally they work very hard at that for that money.
Michael Milliken, for example, was loathed for his work in junk bonds,
yet some economists praised him as helping the market be more efficient.
The free market almost never gives money away easily.
The other angle is when wealthy families let non-working members
benefit, such as the wasted life of Paris Hilton. Here is an interesting
article about that. Here I agree completely with Rauh; unearned income
is a socially destructive force. Michael's phenomenon is called
apoptosis or programmed cell death, and it occurs when the cell is 'not
useful.' My Scotch Pines do that because they have grown too close
together and the needles that cannot get sun die off.
Cargill, it appears, tried to convert the parasitic members of the
family into productive forces. See also the book, The Millionaire Next
Door and especially the chapter on giving children unearned income.
Bread And Circuses
Brigid McMenamin, Forbes Magazine <http://www.forbes.com/forbes>, 12.25.00
Family members who work in the business tend to view nonworking
shareholders as parasites, explains Michael Horvitz, a partner at
Cleveland law firm Jones Day Reavis & Pogue who helps rich families with
such problems. Shunted aside, the nonworking shareholders, often
younger, can't understand why their paper wealth doesn't mean more cash.
They tend to suspect their elders of cheating them to protect their own
positions, perks, progeny and estate plans. "It's really an attitude
problem," says Horvitz. Here are how some companies besides Milliken
have quelled potential uprisings.
Company Est. size Founder(s) Notes
Belk Inc. est. 1888 retail $2.1 b (sales) William Belk & John M.
Belk Since 1997 the Belk empire has been run by three third-generation
men in their 40s, answering to an uncle who is still chairman. Though
the family has had control issues in the past, they are running more
smoothly these days. They bought out one dissident son of the founder in
1996. Other family members sold some of their shares back, in connection
with the 1998 consolidation of 112 corporations into Belk Inc.
Cargill Inc. Minneapolis agriculture $48 b (rev.) William W. Cargill
In the mid '90s, nonworking cousins in their 40s, irked at poor
dividends, threatened to sue Cargill. Their elders appeased them by
guaranteeing a certain level of earnings paid as dividends and putting
four younger relations on the board. The company also agreed to buy back
shares at a price set by an independent appraisal and began holding
regular family meetings, offering jobs, resume help and business seminars.
Cleveland Group Atlanta est. 1925 electrical equipment & aviation $160
m (sales) Ras H. Cleveland The Cleveland Group is run by
third-generation James Jr. with some fourth and fifth generation help.
In 1990 the company asked 20-plus nonworking family shareholders to sell
out at 40% less than fair market value. All agreed.
Freedom Communications Irvine, Calif. est. 1927 newspapers & tv &
magazines & Internet $775 m (sales) R.C. Hoiles Freedom
Communications has been in the founder's family for four generations. It
is 100% family owned but since 1992 has had outside CEOs, and half its
board members have been outsiders. In effort to keep young shareholders
happy, starting in 1996 the company has offered internships and a
training program. They also hold special meetings for all
fourth-generation members and an intergenerational family council with
traditions like "passing the microphone" a la TV talk shows. Founder's
29-year-old great grandson Raymond C. H. Bryan serves on board.
Laird NortonCo. Seattle lumber, real est. fin. svcs est 1885 $652 m
(sales) Matthew G. Norton & William H. Laird Laird Norton has more
than 200 shareholders, all heirs of two clans who have owned the company
for seven generations. They make no promise of jobs for young
shareholders, but keep them happy by helping them find their own careers
with resume advice and by making investments in their new businesses.
So, though the firm began offering to redeem shares in 1996, it has had
Sources: Cleveland Group; 2000 Dun & Bradstreet's America's Corporate
Families; Freedom Communications; Dennis T. Jaffe of Aspen Family
Business Group; Joseph Astrachan, Family Business professor at Atlanta's
Kennesaw State University; Hoover's; 2000 Directory of Corporate
Affiliation; Forbes' Statistics
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G. Reinhart-Waller wrote:
> Where I come from (out west in California) it is called Freeloader.
> ----- Original Message ----- From: "Michael Christopher"
> <anonymous_animus at yahoo.com>
> To: <paleopsych at paleopsych.org>
> Sent: Sunday, January 23, 2005 3:32 PM
> Subject: [Paleopsych] failure of the system
>>>> I am sure there are as many people who got easy
>> money on a free market and are living off that without
>> producing anything. Isn't that a failure of that
>> --Interesting question. In the biological model, that
>> would have to be "yes". Cells that store up energy and
>> don't release it, are useless to the organism.
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